Telomeres are nucleoprotein structures at chromosome ends that are required to completely replicate the linear DNA and to distinguish the natural chromosome end from a double strand chromosome break for purposes of DNA repair. In Drosophila, chromosome ends are maintained by the targeted transposition of three retrotransposons, HeT-A, TAHRE, and TART, as well as gene conversion between telomeres. In the wild type, transposition and gene conversion are sufficient to balance the gradual chromosome shortening due to incomplete DNA replication. Mutations are known that drastically increase or decrease the frequency of retrotransposon addition to a chromosome end, suggesting that this process is under genetic control. We have characterized one mutation that increases the frequency of terminal gene conversion, and are using positional information to clone the gene. A transgene inserted into the telomere between the subterminal telomere associated sequence (TAS) and the terminal retrotransposon array is repressed and variegates. This variegation, termed telomeric position effect, TPE, appears to be due to an interaction of repression induced by TAS and activation initiated by HeT-A transcription. A telomeric transgene thus provides an assay for this interaction. These transgenes may provide a means to investigate the control of HeT-A transcription and transposition, and thus telomere elongation. We have found that when the transgene is in or near TAS, transgene activity is repressed, and expression varies with changes in TAS sequences on the homologous telomere, as well as at other telomeres. Defects in, or deletions of, one of these TAS arrays increase transgene activity, and by extension we infer retrotransposon transcription. This may provide a means to increase transposition when one or more telomeres become abnormally short. With the goal of identifying proteins that play a role in this process, we screened autosomal deficiencies for dominant effects on TPE. Several suppressors were found, but the majority of these suppressors on chromosome 2 mapped to the left end of the chromosome, near the telomere and were associated with deletions of the 2L TAS. Analysis of chromosome 3 suppressors is in progress. Transgenes inserted into the retrotransposon array are not repressed and appear genetically to be in euchromatin.